A global forestry investment company has begun measuring biodiversity baselines across its assets in anticipation of emerging nature markets, a company representative said Thursday.
Speaking at the Asia Carbon Markets conference in Kuching, Malaysia, Geoffrey Seeto, head of emerging markets at New Forests, noted that biodiversity standards were still in their early days, but that the company was trying to get ahead of the curve.
“Immediately in the foreseeable future, we are looking towards biodiversity now, those standards are being developed and we’re baselining all our projects now and trying to track as best we can, so we can establish those baselines when we go forward,” he said.
“It’s a fast-evolving market and we’re getting more and more inquiries from investors looking to offtake some of those credits,” he said.
Australian-headquartered New Forests have some $6 billion in forestry assets under management across the globe, spanning roughly 1.1 million hectares.
Responding to a question from Carbon Pulse, Seeto said New Forests had been approached by a Swedish client to invest in a redwood plantation in New Zealand, which had a lot of biodiversity potential.
“They were willing to purchase biodiversity credits, under certain current standards, very loosely, but they were willing to purchase to help monetise some of the returns to that investment,” he said.
“So we’ve found people who have already started purchasing that.”
Seeto argued that the development of the biodiversity market would occur at a much faster rate than carbon markets, thanks to the lessons learned from the latter.
Despite the breakneck speed of development, experts have warned that high-level principles will be needed to underpin voluntary biodiversity credits before the technical details can be ironed out and the market can scale.
A panel told a conference in New York on Wednesday that the comparisons between carbon and biodiversity markets are limited, given that there is no single way to measure and improve biodiversity outcomes.
Others have warned the market needs time and careful consideration in its development, arguing that some jurisdictions were “sleep-walking into a giant greenwashing nightmare” in their rush to establish biodiversity crediting schemes.
TO TOKENISE OR NOT TO TOKENISE
New Forests’ Seeto said that forest and land use have a multitude of benefits that could yield additional financial benefits if the markets were to take advantage of blockchain technology and tokenise them.
Some market participants argue that tokenisation brings benefits like improved transparency and safeguarding against double use and double counting in markets like carbon and biodiversity.
“If you can tokenise nature as an asset, with regulation coming, then that natural asset will sit on the asset side of your balance sheet, that offsets the liabilities which could be emissions and other types of things. It’s almost like a one-for-one replacement,” he said.
Iain Henderson, co-head voluntary carbon market desk at trading firm DRW, told the panel that technological advancements were making it easier to be able to measure and track changes in biodiversity that would assist the emerging market going forward.
“The technology stacks now exist to be able to use eDNA or acoustic data sets to create big data on which we can apply big data analysis, and start to understand biodiversity,” he said.
“There is this vision of being able to track and monetise outcomes beyond just carbon, whether that’s by biodiversity and water, so it’s quite an exciting space.”
Trading firm Vertree’s carbon lead for APAC, Cheryl Bowler, said that biodiversity was increasingly becoming a focus point for buyers in carbon markets.
“The reality is that credits that don’t have co-benefits, such as biodiversity, are not in demand at all, people just don’t want to buy them, and they don’t want to advertise them being used in any offsetting target that they have,” she said.
However, she added that tokenising credits for the sake of it presented accounting challenges.
“Is that an asset that our financial providers recognise on our balance sheet? These are all questions that need to be answered before we can dive head first into that space,” she said.
By Mark Tilly – firstname.lastname@example.org
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